A plea hearing has been set in federal court for William Smith, the former chief financial officer for the Detroit Riverfront Conservancy who is charged with allegedly embezzling $40 million over.
According to federal court documents, Smith will have a plea hearing on Oct. 21 in Detroit federal court.
On Thursday, Smith was arraigned on new charges in a criminal information that was filed in federal court on Wednesday. Those charges are wire fraud and laundering of monetary instruments.
U.S. Attorney Dawn Ison announced the charges against 51-year-old Smith in June, nearly a month after the nonprofit organization announced they had placed him on leave for a financial investigation.
The new criminal information filing focuses on $14.9 million in conservancy funds that were used to pay off $15.6 million in American Express charges between November 2012 and May 2024.
WATCH: FBI taking over investigation into Detroit Riverfront Conservancy CFO investigation
According to the original complaint, Smith orchestrated a scheme to embezzle millions as early as November 2012.
Feds say he did it in two ways. First, he allegedly used Conservancy funds to pay for charges he and his family accrued on an American Express account. Second, feds say he diverted funds to a company he controlled called "The Joseph Group."
According to the complaint, the funds were not authorized or approved by the board, and that Smith had no authority to use funds to pay his own credit card bills.
Feds say between November 2012 and March 2024, Smith stole nearly $40 million through the embezzlement schemes.
Original complaint information
According to the complaint, Comerica Bank statements from the conservancy show several payments to the AmEx account that Smith had allegedly used.
Those payments include:
- Nov. 5, 2012 - $89,339.43
- Nov. 30, 2012 - $47,231.21
- Feb. 12, 2013 - $60,330.55
- March 14, 2013 - $96,002.12
Other purchases listed in the complaint show purchases for airline tickets, insurance premiums, clothing, jewelry, Louis Vuitton and more.
Some of the purchase on the AmEx account include:
- $4,850 for men’s clothing
- $5,618 for jewelry
- $12,900.44 at a Toyota dealership
- $17,452.80 at Louis Vuitton
In June 2012, feds say the American Express statements showed that Smith used $22,000 in Conservancy funds for his home, including purchases at an interior store, Art Van, The Home Depot and more.
According to the complaint, the payments to American Express using Conservancy funds continued until March 2024.
In the complaint, the feds say the accounting firm Pricewaterhouse Coopers found there were approximately $14.9 million in AmEx payments made from the Conservancy’s Comerica Bank account.
When it comes to The Joseph Group, feds say that Smith allegedly wired funds from the Conservancy’s account to The Joseph Group. Smith allegedly former The Joseph Group about in late 2012, and the payments began in February 2013.
Those payments include a $95,000 wire transfer on Feb. 4, 2013, and another $75,000 wire transfer a week later.
In all, feds say bank statements found 259 wire transfers to The Joseph Group between 2013 and 2024 totaling nearly $24.4 million.
According to the complaint, Smith doctored bank statements provided to the nonprofit's accountant, which led to erroneous financial information being entered into the Riverfront Conservancy's books, which concealed the fraud.
He doctored the bank statements by falsely inflating the available balance in the account, and replacing the transactions involving the American Express payments and the wire transfers to The Joseph Group with other fictitious information, according to the complaint.
For instance, the feds say that a July 2023 statement that Smith gave to the accountant showed a beginning balance of $2,058,892.17 on July 1 2023 and an ending balance of $2,302,164.85 on July 31, 2023.
Actual statements from Comerica show the true beginning balance of $21,064.87 on July 1, 2023, and an ending balance $134,161.66 on July 31, 2023. Below is a photo of the table that shows how Smith concealed the money, according to the complaint.
Also, feds say that Smith got a $5 million line of credit with Citizens Bank on behalf of the Conservancy that he was not authorized to take out. According to the complaint, they discovered the line of credit on May 8, 2024.
The complaint alleges that Smith tried to get the line of credit, and a bank manager at Citizens emailed on Smith on March 29, 2023 asking, "Do you have documentation that supports you as sole signer for all things relating to financing?"
Feds say Smith responded two hours later with a "Corporate Certificate of Authority" that said Smith was fully authorized to get the loan dating back to a conservancy board meeting. However, feds say that document was false.
Citizens approved and funded the line of credit on March 31, 2023 for $3.5 million, and an additional $2 million was approved on March 18, 2024, according to the complaint.
On May 14, the DRC announced they placed Smith on leave after they found discrepancies with their financial documents. They hired a private law firm to investigate, who then turned it over to Michigan State Police. MSP then passed along the investigation to the FBI because it was too complex.
Last week, the conservancy's board voted to fire Smith and replace its CEO amid the investigation.
“As volunteers, we believed that the right team and processes were in place to protect the financial integrity of the organizations,” the board said in a resolution. “That belief was disabused by the recent discovery of this significant financial crime.”
Matt Cullen, Chairman of the Board for the Detroit Riverfront Conservancy, issued the following statement after the charges were announced:
“We commend the FBI and U.S. Attorney’s Office for the quick and thorough start to their investigation, which led today to the arrest of William Smith. We will continue to cooperate with law enforcement to ensure justice is brought against this nefarious scheme to subvert layers of financial controls and embezzle resources from one of the greatest waterfront projects in the United States.”
You can read the whole complaint below
William Smith Complaint by WXYZ-TV Channel 7 Detroit
